The 2023 Recession
Economist Larry Summers has said again that the Federal Reserve should keep raising rates aggressively to tame inflation.
Widely regarded economist Larry Summers has said again that the Federal Reserve should keep raising rates aggressively. The former U.S. Treasury Secretary and Harvard President insists this is the only way to tame inflation. Under the present circumstances, inflation will get much worse. A careful look at his opinion and forecast shows that inflation and a recession could happen simultaneously, leading to the worst economic period since the Great Recession, when the jobless rate reached 10%.
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Summers is a staple on CNBC, Bloomberg and CNN Business. His messages are almost everywhere, at least as far as the business community is concerned. For all anyone knows, members of the Federal Reserve tune in every time he is on the air.
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Summers recently said on CNN, “I look at economic history and I see that there are many times when the Fed didn’t do enough and so inflation re-accelerated, but I can’t find any times in the last 60 years when the Fed did too much.” That means his measurement extends back to when John F. Kenney was president. He said this in the shadow of another Fed interest rate increase of 0.75%, the fourth time it hiked rates as much this year.
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The Fed’s benchmark rate as of later this week will be 3.75%. Summers thinks that rate will need to hit 5.5%. Summers has made several estimates about how high unemployment will need to be to bring inflation back toward 2.5%. These generally have been above 5% and as high as 7%. Today, the rate is 3.5%. That means Summers believes the economy will need to shed several million jobs.
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Inflation will not drop from the current rate of 8% overnight. That means falling employment could crash into rising prices. Americans would be caught in a terrible vice for months.
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
